Canadian employment bursts out in May; 95,000 job gain near biggest ever

OTTAWA - Canada's economy pumped out a stunning 95,000 in May — one of the biggest monthly gains in history — as employers resumed hiring again after a four-month winter hibernation.

Historically, it was the second-biggest job creation month in 35 years — just 100 lower than August 2002.

The number was so shocking that economists, and even Prime Minister Stephen Harper, cautioned that the Statistics Canada monthly reports are subject to wide margins of error.

"We don't obviously want to pay too much attention to what happens month to month, because we know this is very volatile, but the Canadian economy is now up to about a million net new jobs created since the recession," he said at a photo event in Ottawa.

"We obviously know that’s one of the best records in the developed world."

Taken as reported, the massive gain was the first major improvement of 2013 and many times greater than economists had expected, dropping the unemployment rate one-tenth of a point to 7.1 per cent.

There was also little to quibble about in the underlying details of the Statistics Canada report.

All the new jobs came in the private sector and in the employee class — rather than the less desirable self-employment category — and 76,700 of them were full-time.

Even young people had an easier time finding employment in May, with about 54,000 of the new workers in the 15 to 24 age group joining the labour force. That drove down the youth unemployment rate to 13.6 per cent, almost a full point lower than the previous month.

"There's no question this report is absolutely spectacular," said Bank of Montreal chief economist Doug Porter. "Even some of the details were incredible ... so it doesn't look like it was a complete outlier.

"But I would add a couple of notes of caution. I would sincerely doubt we are going to see anything close to this repeated in the months ahead, and the other thing, it did follow a real period of weakness."

Canada's labour market had been seen as struggling in 2013, with the first four months producing a net loss of 13,000 jobs, attributed to the poor economy during the second half of last year.

That may explain the May blow-out. Economists note that Statistics Canada cautions the error range in the labour market survey is quite high, plus or minus of about 27,000, two-thirds of the time. For a 95 per cent confidence factor, the variation is plus or minus about 54,000 jobs.

Analysts said a more reliable measure of Canada's labour market is the three and six-month rolling average, which even out monthly volatility. Using those measures, Canada created on average between 18,000 and 19,000 jobs a month respectively, indicative of an economy growing at about or just below two per cent.

"Those are decent paces but not as dramatic of a hiring enthusiasm as the monthly estimates suggests," notes economist Jimmy Jean of Desjardins Capital Markets. "With an unemployment rate at 7.1 per cent, we can at least conclude that employment is ... doing okay in Canada."

It's certainly better than in the U.S., which posted a humble 175,000 gain. Given the difference in populations, the U.S. would have needed to create one million jobs in May to match Canada's result.

There were some head-scratchers in the Canada numbers, however, including that both hours worked and wages slid marginally, again suggesting Canadian labour conditions are not as strong as the outsized job increase suggests.

Regionally, employment rose in most provinces with Ontario realizing the lion's share, adding 50,600 workers. Employment also rose by 18,600 in Alberta and 20,100 in Quebec.

By industry, there was a big surge in construction jobs in May, rising by about 43,000, and retail and wholesale trade added about 27,000 workers. Employment in so-called other services, such as repair and maintenance, increased by 22,000, and there was a 21,000 gain in people working in business, building and other support services.

However, the battered manufacturing sector did not join in the bounty. The agency said there were 14,200 fewer factory workers in May than there had been in April, bringing the total losses in the sector in the past year to almost 100,000.